- within Litigation and Mediation & Arbitration topic(s)
The Constitutional Court, in its assessment of the alleged violation of the right to property and the right to an effective remedy due to the failure to compensate for the loss in value of receivables caused by inflation, ruled that there is no effective legal remedy to prevent the depreciation of receivables against inflation and initiated the pilot judgment procedure.
On 8 July 2025, the Constitutional Court, in its decision numbered 2024/41763 (the "Decision"), ruled that the right to an effective remedy under Article 40 of the Constitution, in connection with the right to property guaranteed under Article 35, had been violated.
The subject of application to the Decision concerns the allegation that a receivable arising from a debt relationship between two private law persons lost its value against inflation due to lengthy judicial and enforcement proceedings. The applicant argued that the loss suffered because of the delayed collection of the receivable constituted additional damages and filed a lawsuit pursuant to Article 122 of the Turkish Code of Obligations No. 6098 ("TCO").
The first-instance court held that it was not legally possible for the applicant to claim compensation for additional damages in addition to default interest and therefore dismissed the case. The appellate courts upheld this assessment, ruling that the loss of value caused by inflation did not constitute concrete and demonstrable damage, and accordingly rejected the claim.
The Constitutional Court determined that although Article 122 of the Turkish Code of Obligations provides, in theory, a means for the creditor to claim compensation for additional damages arising from the debtor's default, in practice it does not allow for the recovery of losses caused by inflation. Indeed, as noted in the Decision, a review of relevant case law dating back to the 1980s shows that actions for additional damages have been insufficient to compensate for the loss in value resulting from inflation and that creditors have not been satisfied through this remedy due to the requirement of concrete and direct proof. Consequently, the Court concluded that the existing legislation does not provide any safeguard capable of preventing or compensating the actual loss in value suffered by creditors.
As a result, the Constitutional Court held that the existing legal remedies – particularly actions for additional damages – do not provide an effective means of redress against the depreciation of receivables due to inflation, that this situation has led to an increase in similar applications, and that it has become a structural problem. Accordingly, the Court found a violation of the right to property guaranteed under Article 35 of the Constitution and the right to an effective remedy set forth in Article 40.
In order to prevent the submission of similar individual applications, the Constitutional Court decided to notify the Grand National Assembly of Turkey of the Decision and to postpone the examination of applications of the same nature for a period of six months from the date of its publication in the Official Gazette. In doing so, the Constitutional Court applied the "pilot judgment" procedure regulated under Article 75 of the Rules of Procedure of the Constitutional Court, which bears resemblance to the "Declaration of Incompatibility" mechanism that holds a significant place in the legal system of England and Wales.
You can access the full text of the Decision via this link. (Only available in Turkish)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
